What does car insurance really cost? Revealing cost factors and saving opportunities for 2025
16 Jun 2025
11
Minutes
Katrin Straub
CEO at nextsure
The cost of car insurance often seems like a closed book. Many drivers pay hundreds of euros annually without knowing the exact factors that influence their premium. Discover now how your contribution is composed and which levers you can use to significantly save.
The topic in brief and concise terms
The cost of car insurance depends on over ten factors, including regional class, type class, and no-claims class, which are re-evaluated annually.
The prices for car insurance have risen by an average of 20 percent in 2024, attributed to higher repair and replacement part costs.
By choosing the right tariff, adjusting the deductible, driving performance, and driver circle, you can save several hundred euros annually.
Accurately deciphering the cost factors of your car insurance
The price of your car insurance is not a random outcome. Insurers calculate premiums based on more than ten individual risk factors. The regional class reflects the claims record of your registration district; there are over 400 different districts here. The type class assesses your specific car model among almost 32,000 variants in terms of its susceptibility to damage. Your personal no-claims discount class (SF-Klasse) rewards accident-free driving with discounts of up to 80 percent. These three pillars form the foundation of your premium amount. However, other aspects also play a significant role in the question: What does car insurance cost? These include your annual mileage, the age of the drivers, and the number of registered users. Even the location where you park your vehicle at night can influence the premium by a few percentage points. A garage parker often pays five percent less than someone who parks on the street. These factors significantly determine how much you need to pay for your insurance cover.
Understanding Price Increases and Assessing Average Costs 2024/2025
The costs of car insurance have noticeably increased in recent years. Between 2023 and 2024 alone, premiums rose by an average of about 20 percent. A key reason for this is the rising costs of spare parts and garage repairs. The average claim in motor liability insurance climbed from 2,500 euros in 2014 to 4,000 euros in 2024. This is an increase of sixty percent in just ten years. Experts anticipate further adjustments for 2025, as insurers expect persistently high costs for claims and administration. The motor insurance industry forecasts an increase in premium income of up to eleven percent for 2025. Despite this development, there are significant differences in what car insurance costs. A basic motor liability insurance is the cheapest option and is chosen by over 58 percent of vehicle owners. The differences between partial and fully comprehensive insurance are clearly noticeable in terms of price. Comprehensive insurance offers the most extensive coverage but is also the most expensive. Knowing these trends helps you evaluate offers correctly.
Regional class and type class: Your place of residence and vehicle model in focus
Two often underestimated but crucial factors for the cost of your car insurance are the regional class and type class. The regional class is determined annually by the German Insurance Association (GDV) for each of the over 400 registration districts in Germany. It reflects the local claims record: Many accidents or thefts in a region lead to a higher classification and thus to more expensive premiums. There are twelve regional classes in liability insurance, 16 in partial coverage, and nine in comprehensive coverage. A lower regional class often means cheaper premiums. The type class of your vehicle has a similar impact. Nearly 32,000 different vehicle models are evaluated here each year based on their accident and repair statistics. Models that are statistically less likely to be involved in accidents or cause lower repair costs receive a lower type class. Sports cars and large SUVs often have higher type classes than small cars. Checking the current type class statistics before buying a car can save you hundreds of euros per year. These two classification systems explain a large part of the premium differences.
No-claims discount class (SF-Klasse): Maximise your reward for accident-free driving
Your no-claims discount class (SF-Class) is a powerful tool to reduce the cost of your car insurance. The system rewards drivers for each year without a reported claim with a higher discount. The SF-Classes typically range from SF 0 for beginners to SF 35 or even SF 50 for long-standing claim-free drivers. With a high SF-Class, you can significantly lower your premium rate in third-party liability and comprehensive insurance - partial coverage is not affected by this. A beginner often starts with a premium rate of over 100 percent of the basic amount in SF 0. After just one claim-free year, an upgrade occurs, for example to SF 1 with a rate of perhaps 70 percent. After 35 claim-free years, the premium rate can drop to below 20 percent. Every claim-free year counts and noticeably reduces your premium. In the event of a claim, a downgrade occurs, the extent of which is specified in the SF-Class tables of your insurer. It is important to understand the premium rate of your car insurance precisely. Thus, the SF-Class is a direct reflection of your driving history and significantly impacts the cost of your car insurance.
Practice Check: This is how much car insurance costs for different types of drivers
The question "What does car insurance cost?" cannot be answered with a blanket statement, as individual factors vary significantly. A novice driver (18 years, SF 0) often has to expect annual premiums of around 1,000 euros or more for a small car. In contrast, an experienced driver (45 years, SF 25, garage, 15,000 km/year) with a mid-range car may only face costs of 300 to 500 euros for comprehensive cover. A pensioner (70 years, SF 35, small car, 5,000 km/year) might pay even less, often under 300 euros. These examples illustrate the enormous range. The annual mileage is a significant cost factor. Those who drive only 5,000 kilometres pay up to 25 percent less than someone covering 20,000 kilometres. The circle of drivers also plays a role: if the vehicle is used only by the policyholder and their partner, it is usually cheaper than if young drivers under 25 are included. About three-quarters of the insured choose a restricted user group. An accurate calculation is therefore essential.
Here are some typical cost examples (annual contributions, fully comprehensive with 300 euros excess, partially comprehensive with 150 euros excess):
Novice driver (19 yrs, VW Polo, SF 0, 10,000 km): approx. 900 - 1,500 euros
Family (father 40 yrs, mother 38 yrs, VW Golf, SF 15, 15,000 km, child 18 yrs registered as driver): approx. 600 - 950 euros
Commuter (50 yrs, BMW 3 Series, SF 30, 20,000 km, garage): approx. 450 - 700 euros
Pensioner (68 yrs, Opel Corsa, SF 35, 6,000 km, garage): approx. 280 - 450 euros
These figures are estimates and may vary depending on the region, exact model, and insurer. However, they indicate the tendency of how strongly individual characteristics can impact.
Reducing costs: Effective strategies for a cheaper car insurance
There are numerous ways to actively influence what your car insurance costs. Paying annually can reduce your premium by up to five per cent compared to monthly payments. [-,-] Agreeing to an excess (e.g., €150 in the partial cover, €300 or €500 in the comprehensive cover) also significantly reduces the premium – often by 15 to 30 per cent. [-,-] Consider whether a repair shop tie-in is suitable for you; you can save up to 22 per cent if you have repairs carried out in the insurer's partner workshops. [-] Limit the group of drivers to the most essential individuals. If young drivers no longer drive the vehicle, report this immediately. [-] Check your annual mileage and adjust it if necessary – fewer kilometres often mean a saving of ten to 15 per cent. [1,-] A second car can often be classified cheaper if the first car already has a high no-claims bonus class. Use these levers to optimise your costs.
Further specific cost-saving measures include:
Compare tariffs: Check current offers at least once a year.
Adjust coverage: For older vehicles over ten years, partial cover or just third-party liability is often sufficient. When is comprehensive cover no longer worthwhile?
Utilise discounts: Some insurers offer discounts for certain professional groups (e.g., civil servants, farmers) or for homeownership.
Check telematics tariffs: With careful driving, savings of up to 30 per cent are possible here.
Seasonal registration plates: For vehicles not used year-round (e.g., convertibles, motorcycles).
Pay for minor damages yourself: To avoid a downgrade in the no-claims bonus class, it may be worthwhile to cover minor damages up to about €500 yourself.
Combining these measures can often result in a significant reduction in insurance costs.
Expert Depth: Understanding Legal Foundations and Current Court Rulings
Car insurance in Germany is based on solid legal foundations. The Compulsory Insurance Act (PflVG) mandates that every registered motor vehicle must have liability insurance. This obligation serves to protect traffic accident victims by ensuring that they are compensated even if the accident causer cannot personally cover the damages. The Insurance Contracts Act (VVG) regulates the general rights and duties in the relationship between the policyholder and the insurer. The Motor Vehicle Compulsory Insurance Ordinance (KfzPflVV) specifies details, such as minimum coverage amounts. Our expert tip: Ensure sufficiently high cover, ideally 100 million Euros aggregate for personal injury, property, and financial losses. Current court decisions can also be relevant, such as regarding gross negligence or disputes concerning claims settlement. For instance, insurers can reduce their payment if obligations are breached following an insurance claim, but they must lodge this within one month of the breach becoming known through termination. A good understanding of these basics helps you better assess your rights and obligations and understand the costs of your car insurance. For beginners, it is particularly important to carefully check the conditions.
Special case for new drivers: Avoid cost traps and leverage savings potential
Your path to optimal and affordable car insurance
More useful links
Statistisches Bundesamt (Destatis) offers official press releases and statistical data that can be relevant for analysing cost factors.
Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides comprehensive statistics on the development of motor vehicle liability insurance.
Through the GDV, you can inquire about the current type classes for your vehicle model, which significantly influence the cost of your car insurance.
Verbraucherzentrale offers practical tips and information on how you can save several hundred euros on your car insurance.
Kraftfahrt-Bundesamt (KBA) publishes official vehicle statistics that provide insights into the vehicle fleet in Germany.
Deutsche Bundesbank informs about the current inflation rate in Germany, an important factor for the general cost development.
Bundesfinanzministerium provides information on taxes, including insurance and fire protection tax, which are relevant for insurance.
FAQ
What most affects the cost of my car insurance?
The most important factors are your no-claims bonus class (SF class), the type class of your vehicle, and the regional class of your place of residence. However, individual characteristics such as annual mileage, the age of the drivers, and the chosen deductible also have a significant impact.
How can I save on car insurance as a young driver?
Young drivers can save money by insuring the car as a second vehicle through their parents, participating in accompanied driving, transferring an existing no-claims bonus class, choosing a car with a low insurance group, or using a telematics tariff.
Is fully comprehensive insurance always worth it?
A comprehensive insurance policy is especially worthwhile for new cars and young used cars (up to about five years old). For older vehicles, a partial coverage insurance or even just the legally required liability insurance may often be sufficient and save costs. The value of the vehicle and individual security needs are crucial.
What is the difference between type class and regional class?
The type class assesses the risk of damage for a specific vehicle model (e.g. VW Golf vs. Porsche 911). The regional class evaluates the risk of damage at the vehicle owner's place of residence, based on the accident and theft statistics of the registration district.
How often should I review and compare my car insurance?
It is advisable to review your car insurance at least once a year and compare offers. Especially before the deadline of 30th November or if there's a change in your circumstances (such as moving house, getting a new car, or a change in the group of drivers), it could be worthwhile to switch.
What are the legal foundations for car insurance in Germany?
The most important legal basis is the Motor Vehicle Mandatory Insurance Act (PflVG), which requires motor vehicle liability insurance for all registered vehicles. Other relevant laws include the Insurance Contract Act (VVG) and the Motor Vehicle Mandatory Insurance Regulation (KfzPflVV).
